Africa’s prospects ‘hinge on trade’Comment on this story
Johannesburg - Africa’s economic prospects were a key conversation point during the Candid Business show this week.
Ellis Mnyandu, the Business Report editor and the show’s executive producer, highlighted the fact that Chinese Premier Li Keqiang had visited Africa this month with stops in Angola, Kenya, Ethiopia and Nigeria.
At the same time, the World Economic Forum on Africa was held this month in Nigeria.
Despite positive signs, Mnyandu said unemployment in Africa remained high, instability was prevalent and corruption widespread.
Mnyandu then introduced International Monetary Fund (IMF) representative Axel Schimmelpfennig and Daniel Kinnear from Africa Strategy Group to the show.
The IMF is forecasting that sub-Saharan Africa will grow by 5.5 percent this year from 4.9 percent last year.
Schimmelpfennig said this forecast was based on the IMF’s global model.
“On the one side, the advanced economies are slowly picking up speed, in particular the US, despite the data in the first quarter that was quite disappointing.
“In Europe you are seeing some green shoots. You are seeing some good news from Japan. All that creates export demand for African products, so that is the good news.
“In a number of emerging market economies we are seeing growth slowing. To the extent that African countries trade with these countries, that is a bit of a headwind.
“Emerging markets, for the past couple of years, have been the key drivers of commodity prices. The commodity price [rises] that we have seen have been driven by demand from China and Asia. Commodity prices are stabilising as demand stabilises. From a historical perspective, commodity prices are at a very high level.
“Looking at Africa, private sector activity is moving forward very nicely. Governments in many [African] countries [are] being accommodating to the economy. Given this, we expect growth to accelerate to 5.5 percent this year and next year,” Schimmelpfennig said.
Turning to South Africa, Schimmelpfennig said for the country to grow, the government needed to move forward with implementation of the National Development Plan.
On the topic of the mining sector, Schimmelpfennig said employers needed to ensure that workers were paid a reasonable wage and that working conditions were right, but this needed to be balanced against the need to improve mining productivity.
On black economic empowerment (BEE), African Strategy Group’s Kinnear said the policy had become a box ticking exercise.
“I think it [BEE] has a place to level the playing ground in South Africa and across Africa. It is perceived as a race issue.”
Schimmelpfennig said there was no doubt that there was a need for a quota target system like BEE.
“To make that really successful, you need to ensure that those people you wish to push forward have the skills and education that they need to succeed in those positions.
“The problem is that the education system does not provide a large share of the population with the skills that they need to compete.”
He said a key way to create jobs was via small businesses.
Arnie Hicks, the co-host and associate producer of Candid Business, said the problem was that small businesses faced numerous obstacles. “I believe our banking sector is not friendly towards building small and medium enterprises.”
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